Strategic stake sale is imminent, is the word coming in from D Datar, ED & CFO, ABG Shipyard. He is looking for strategic investors into the business. He also gives his view on shipyard business in India.
Below is the verbatim transcript of D Datar's interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.
Latha: There is a lot of market talk about Mahindra and Mahindra (M&M) and other companies looking to acquire controlling stake in your company. Can you tell us if talks are on?
A: I don’t think there is any specific comment like this. However, what I can tell you is that there is a complete reorientation on the business model of shipyard in India. Basically it is the third large private sector shipyard and we are one of the prominent ones. As you know, the entire focus of the business is on the defence side. We are fully qualified to build all kinds of ships for defence and this new government has moved very positively on allowing private sector yards to participate in large different standards. I think that is where the whole discussion is.
Sonia: If you can just tell us, if an acquirer does come in at any point in time what happens to the debt, will the debt be taken up buy the acquirer? Is there any chance of refinancing the debt because it so high at more Rs 11,000 crore?
A: We are not disturbed by the debt number because that is ultimate debt which will farm out in the next 10 years as far as the restructuring process is concerned. If there is good buoyancy in the business this debt looks very small to us.
Latha: Now to even bid in any of the defence contracts you will need money, therefore will you look at strategic partnerships?
A: We are very open to strategic investors in the business. The whole model of this strategic investment is not planned out as yet. Let us see, it is only time that can tell what exactly will happen.
Latha: DB International we hear has been buying some stake, some shares of yours – are you looking at any private equity partnership from them or even a strategic buyout?
A: No, nothing like that. They are purely at this moment investors. They have picked up shares from the market; that is it.
Sonia: What are your own assets and how different are your assets between the other players like Pipavav, etc?
A: Everybody’s asset has got some qualities. We have a different business model as far as ship building is concerned. We are more on modular ship building, we have got ship-lift, we have got dry dock. We believe that we have more flexibility in building any kind of ship and launching it at any point of time.
Sonia: Will you continue to post losses because you have been posting losses for the last many quarters?
A: That is okay because once we go into debt restructuring and as you know the global ship building market and shipping market is still not coming around.
Latha: That is exactly why we are asking you if you are looking for equity partnership and when can we hear about this entry of equity, will it be within this quarter, will it be within the June quarter?
A: That nobody can answer because it is a process driven issue and whenever certain steps happen and if we need to make a public announcement we will definitely do it.
Latha: Any equity entry is imminent you would say, in a few months we should hear, in a few weeks?
A: It should be imminent. I cannot comment whether it is very imminent or not. However, we are seeing this as a complete game changer. Defence is a game changer for ship builders in India and that will attract a lot of players as government has allowed FDI up to 49 percent.
Latha: Is M&M one of the parties you are speaking to at all?
A: I can’t comment any name specific.
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